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  Jeff Bailey   4/25/02,  11:42:12 PM
Going for the throat! Bullish and bearish traders. Please be disciplined with your stops! We're seeing some stocks that are breaking from "pivots" and ranges and when they break, we're seeing some sharp moves.

This is very indicative of what we've mentioned in recent session regarding some good straddle/strangle setups in the major market averages.

There was so much going on today that it is/was difficult to keep up with everything and type it here.

4-days ago I mentioned a good "pivot point" to set up a straddle/strangle trade on SanDisk (SNDK) (See 04/19 04:28:01) Link and the stock declined some 15% down to 38.2% retracement.

Then Monday 04/22/02 I profiled the SNDK straddle Calls (SWQFD) $1.85 and puts (SWQRD) $2.25, which at market close is just "break even" if 2 contracts were bought of each ($820 total trade, excl. comm.).

We've talked before about simply holding the straddle with plans to monitor and then close out when desired gain is achieved. So far, trade scenario is going to original "scenario" of 04/19 market monitor and potential bear trap taking place right now.

Expect volatility (not only in SNDK) and be true to your stops and targets!

  Jeff Bailey   4/25/02,  6:23:26 PM
Would you comment on why Microsoft is going up today? Some news I missed?

Only news I see is that McAfee.com's (MCAF) CEO hinted that a collaboration with MSFT $53.73 +1.33% may be announced in next 4-6 weeks.

Technicals have MSFT sitting right on long-term upward trend (anchor 12/21/00, attched 09/21/01). A retracement from the 12/20/00 close of $41.50 to the relative high on 06/08/01 near $73.64 has 50% at $57.57 (served as resistance last week) and 38.2% at $53.77 (right in here and criss-cross with upward trend).

Current levels most likely very KEY levels and my guess is that there are lots of shorts taking some gains off the table and implementing some risk management in their account. Break of $52.68 (04/18/02) low could then have 19.1% retracement at $47.63 as next target.

Based purely on risk/reward from trend. Downward trend is up at $60.50 right now, while upward trend is right at current levels. This has me thinking that some bears MUST be taking some profits and undoubtedly some longer-term bulls buying at current levels.

  Jeff Bailey   4/25/02,  5:16:19 PM
Japan .... hmmmm... some interesting technicals perhaps in the Nikkei ($NIKK) p/f chart Link

compared to the Dow Industrials ($INDU) Link , which has been looking more bearish.

Relative strenth chart of the Nikkie versus Dow Industrials Link also starting to shape up a bit. Maybe something to Merrill's 03/06 comments and other items discussed from 03/07's 01:OO EST Update. Link

June Japanse Yen futures (jy02M) gapped higher vs US$ today to finish at 007795.

  Jeff Bailey   4/25/02,  4:00:24 PM
Disney (DIS) reports earnings of $0.13 a share, better than consensus of consensus for $0.10.

  Jeff Bailey   4/25/02,  3:59:16 PM
Disney (DIS) $24.80 +0.93% ... stock spiking after just recently reported earnings.

  Jeff Bailey   4/25/02,  3:56:01 PM
Into the close... Dow Industrials trading at session high. Traders citing comments from Minneapolis Fed President Stern, who said that the economic recovery is well underway and that caution is the key to monetary policy; while "friendly" would be the term used, very similar to some things from yeterday's Beige Book review about economic growth is there, but uncertainty of "rate of growth."

Link to Beige Book report for post-market review. Link

  Jeff Bailey   4/25/02,  3:49:34 PM
MACR I like the June $22.50 (MRQFU) $1.90.

  Jeff Bailey   4/25/02,  3:48:45 PM
Macromedia (MACR) $21.52 +22.78% ... MASSIVE divergence here! Spread triple-top at $21. Looks bullish. Link

  Jeff Bailey   4/25/02,  3:42:46 PM
Coca Cola (KO) and Philip Morris (MO) Both Dow component stocks we mentioned a couple of days ago from Wall Stree Journal article that show both have been heavily shorted in recent month. Both holding up rather well today and hints that some bears indeed be taking the broader market weakness and Dow weakness to do some covering.

  Jeff Bailey   4/25/02,  3:37:14 PM
Jeff, Is it worth to short DYN at this time? thanks

That's a question that you must answer for yourself. I consider it an aggressive bearish play.

Was it worth it for ADLAC/ADLAE on the break to new lows at $18.50? Link

Was it worth it for Enron ENRNQ Link

As long as trader is disciplined and understand his/her risk, then one can make educated decision.

Turn the table and ask yourself if you're a buyer.

  Leigh Stevens   4/25/02,  3:20:02 PM
FINAL HOUR UPDATE - INDEXES: All the Indices continue to drift, off from their lows, but looking like its just a pause before fear & loathing type selling sets in again on the next earnings bomb. As noted earlier, institutions "defended" the 200-day moving average in the Dow at 9935. When the initial sell off to under this level lacked heavy offers, bids came back in some of the big cap stocks. This appeared to be some hedge fund short-covering, money managers adding to their positions in some Dow issues and some index arbitrage between futures and stocks. However, this activity is only the first round, so to speak. There is not a huge conviction about the market here, but its typical for the even 1000 levels to find some buying interest.

Meanwhile, the Dow Transportation Average ($TRAN) has been weak for more than a week. In a perfect example of support, once broken, "becomes" resistance. At 2820, the transports broke its Oct-Feb.up trendline -- a subsequent rebound got back up to the 2880 area, at what was then, "the kiss of death" of trendline. The former support trendline deflected the rally, beginning a slide that took the TRAN average to a new downswing low -- at today's 2660 low the average is nearing the Feb. low in 2600 area. It seems probable that 2600 area will be re-tested, maybe exceeded.

  Jeff Bailey   4/25/02,  3:04:27 PM
know what you're doing Charles Schwab (SCH) $11.19 -1.4% most likely not a short/put candidate for bear on news of potential SEC investigation of analysts. SCH is an "order taker" and not analyst house.

  Jeff Bailey   4/25/02,  3:00:24 PM
Brokers getting hit on concerns of broadening investigation of analysts.

JPM is stock I've liked short just below bearish resistance trend. Still like it to be honest. Link

  Jeff Bailey   4/25/02,  2:56:15 PM
Dynegy (DYN) $20.04 -26% ... (see 01:00 Update). Done... look the other way, this could get ugly.

  Jeff Bailey   4/25/02,  2:28:05 PM
Biotechnology Index (BTK.X) 437.87 -3.63% ... trading session low and getting alert here. I have retracement from $673.77 to $382.28 on one of my BTK.X charts, which defines the range from the 03/23/02 lows to 06/05/01 high. This give us 61.8% at $493.69 (got hit hard as resistance just four sessions ago). If short some biotechs with larger gains, would look to sit some bids on partial positions in here to lock in gains.

Furthe weakness can also be used by traders as sense that MARKET lacks some aggressive bulls.

  Jeff Bailey   4/25/02,  2:14:46 PM
Maxim Integrated (MXIM) $49.95 -0.15% ... does mxim look to be forming a base here to go up or pausing for downward movement? i realize that the trend is down, but still concerned. i even waited for good conformation of break below the 49.89 (49.50- bought may 45 puts) as suggested but present action has me concerned. any thoughts please.

I have an upward trend from the Sept. lows attached to the 02/28/02 pullback and extension of that trend violated yesterday. Stock now sitting right on the 200-day MA (tie that in with Dow Industrials, NASDAQ test of Feb lows) and you've got a stock that looks to be a "market perform" is my thinking.

By buying May (currnent expiration) and that far out of the money puts, I consider this a "lottery play" and would do nothing at this point as lottery plays are considered (in my book) risk capital.

Point/figure chart broke bullish support and gave spread-triple-bottom at $51. Vertical count is bearish to $39, so that would be ultimate target. Not sure it will do that by May expiration, but never can tell. Will have to do some work with retracement.

  Jeff Bailey   4/25/02,  1:55:37 PM
How do you feel right now? with some trades you hold, long or short? Or trades you closed out?

If you can, write down these "feelings."

If you're a trader that had some DJX.X puts and wish you had closed them out at the 200-day MA, write that down, set an alert just above that level.

Then if alert is triggered again and you feel like "holding on," review the notes and judge any potential "emotions."

  Jeff Bailey   4/25/02,  1:49:39 PM
Hmmm.... Cisco (CSCO) $14.71 and Applied Micro (AMCC) $6.69 both bidding a bit today. Yesterday the stocks diverged (CSCO up, AMCC down) against my scenario that a decline in AMCC would see weakness in CSCO.

Still looking at CSCO's 60-minute chart which has 50-pd trending lower at $15, with 200-pd at $15.91. If AMCC just sits around and doesn't doo much on a CSCO rally, will look short/put CSCO in mid-$15

  Jeff Bailey   4/25/02,  1:39:50 PM
CNF Inc (CNF) Options trader setting alert at $31, and willing to take a look at the June $30's (CNFFF). Trader's target of $33 might just see a double or close to it, but will have to look at premium of call if alert is triggered.

Point/figure still quite bullish with vertical count of $59. All heck could break loose on trade at $35. Link

  Jeff Bailey   4/25/02,  1:36:37 PM
CNF Inc. (CNF) $31.55 +2.36% ... is stock we've mentioned as bullish for some time. Tough little "bugger" at/near that $30 level isn't she? Link

Will note it hasn't tested 200-day yet and gives impression of some relative strength versus Dow Industrials and perhaps more sponsorhip from bulls.

  Jeff Bailey   4/25/02,  1:33:01 PM
Interesting "match" between the Dow Transports (TRAN) Link pullback near the 200-day MA and early morning test of the Dow Industrials Link

Tranpsorts look a little stronger technically and may have to start looking once again for some strong stocks in the group near good support levels and see if they're holding.

  Leigh Stevens   4/25/02,  1:23:44 PM
Subscriber question: "Leigh, Quick question. What are you using for your anchor point on your hourly channels? (e.g., 4/24, 9:45AM: 'Support below this area, looks like 1090, at low end of hourly downtrend channel.') I must be missing something"

I tend to show my hourly charts, with channel line markings, on my nightly Index Trader wrap up -- e.g., last night at Link I go back 20-30 days and find the best definition for upper or lower trendline, then apply a parallel line to it and extend into future.

I think your question relates to NOT being able to SEE the chart I am talking about. This is important, as there are great variations in drawing trendlines, channels, etc. You'll notice, for example, that I may cut through some spike highs or lows as I tend to look for the predominate "line" of the trend; i.e., "internal" or "best fit" trendlines.

  Leigh Stevens   4/25/02,  1:11:34 PM
Subscriber NOTE: "I read with interest your nightly comments, however you always show 60min. charts with trend lines, to act as a guide. In the same nightly wrap up, AUSTIN, technally uses weekly/daily and 60/30. I guess the more you use the better. My question is: With maybe 10 symbols we are following do we need 4 charts for each ? I use Qcharts thank you."

I tend to use a number of charts for each important item or symbol; e.g., I might have one Workspace for SPX, OEX, etc. with everything from 60min to 2 daily charts, with different things on them; weekly, monthly, etc. Maybe 6 or more chart windows in each workspace that are related to the same item. I may also have key bellwether stocks related to an index; e.g., on the COMP or NDX: INTC, MSFT, CSCO, ORCL & QCOM daily charts.

Thanks for reminding me to show weekly charts more as I maybe am overlooking this aspect some -- in reality, I check the longer time frames often -- not that they change that much, but it’s a good reminder of where we are, in terms of trendlines, support/resistance/ overbought/oversold, etc.

  Leigh Stevens   4/25/02,  12:57:51 PM
Can concur that the recent sharp, but momentary, dip in the market was on the news of the explosion in NY. You cannot overestimate how jittery people in lower Manhattan still can be relative to explosions occurring on the Island of unknown origin. I'm still a bit tramatized about such things myself and can still vividly see the smoking rubble pile that was so high, but so low relative to the 105th. floor where my office was in the north tower of #1 WTC. Surreal.

  Leigh Stevens   4/25/02,  12:50:13 PM
Subscriber Note: "Leigh, This is a brilliant thing that you have started here. It really makes you pause and ponder. Please try to keep it up on a daily basis."

ON THIS DAY I am reminded that I have been neglecting this yesterday and today & I find it fun & interesting too

ON THIS DAY in 1792, a French highwayman -- with no further shouts of whatever "stand and deliver!" is in French -- became the first person under French law to be executed by the guillotine - ouch! In this market do not lose YOUR head!!

ON THIS DAY in 1898, the U.S. declared war on Spain -- I would ask what that was about, but a subsciber would probably tell me, as one did the other day about the Order of the Garter (very interesting that). Can't believe we picked on my favorite non-English speaking country in Europe. Yes you guessed it, my FAVORITE country is England, but they only loosely consider themselves "Europeans".

  Jeff Bailey   4/25/02,  12:37:31 PM
Jeff Have you noticed how the market chopped up and down in an usually rapid fashion a moment ago. It went down 9 points in one minute and then recovered most of it in the next minute. What's your take on the market direction today? I always appreciate your insight into technical analysis. Thanks.

Yes... this most likely due to news of explosion in building in New York.

Since newswires have been rather quick to jump to some conclusions, I will only report that there was indeed an explosion in a building near W 19th and 6th.

  Leigh Stevens   4/25/02,  12:33:24 PM
Index Update: Well, the key Index to watch is the Dow 30 (Industrials - INDU) and the key level to watch is 9935, at the 200-day moving average today. No accident that low today was not far under this level and INDU rebounded from there. The majority of traders and money managers watch the Dow and watch the 200-day average. They may not know a stochastic from a stone, but they do watch this one and will tend to lay off selling around this presumed support area at 200-day Dow average on a 1st. decline. Price pattern on hourly charts on ALL the indices, SPX, OEX, DJX, COMP, NDX and QQQ looks like minor consolidations only (small bear flag formations), that suggest a current pause only in the ongoing downtrend. I would look for lower levels ahead. Support areas implied by the low end of hourly downtrend channels: SPX > 1075-1080; OEX > 530-531; DJX > 98.5-99.0; NDX > 1260; QQQ > 31-31.5

  Jeff Bailey   4/25/02,  12:04:54 PM
Sony (SNE) $55.82 +3.4% ... is "tech-like" stock we've been bullish on for subscribers looking for some "Japan" exposure. Stock continues to perform well and profiled October $50 calls (SNEJJ) from 03/06/02 ($7.40) doing just fine. Link

As recently mentioned at $51-$52, pullback did find support. Now we simply monitor gong forward. Would sell target near $70 if reached prior to expiration.

Now news I see to explain today's gap higher.

  Leigh Stevens   4/25/02,  11:58:39 AM
SMOKING SECTORS: How high can they go? - Keeping my overheated brain busy, I took a look to see if I could calculate much higher targets on some HOT SECTORS on a technical basis: Sectors like Healthcare Payors Index ($HMO.X) -- at 604.2 - projects to as high as 734; Health Provider Index ($RXH.X) -- at 366.0 - estimate some resistance coming in around 386; if it breaks out above this leve, one projection is to 430; Gold and Silver Index ($XAU.X)- at 75.5 - would have some potential resistance at 88-90, but with a possible objective to 100 area, which would likely prove to be major resistance, if reached; Oil Services Index ($OSX.X) -- at 106.4 - has some resistance nearby at 112, but a possible upside target I calculate is 116; major resistance comes in beginning at 135, extending to 143;

NET, NET: it would not be surprising to see healthcare go up further, but not to the moon; the 2 commodity-related sectors have room on the upside also, maybe 25% additional upside.

  Jeff Bailey   4/25/02,  11:54:56 AM
Kronos (KRON) traders should be looking at both SAP and PSFT.

PSFT $22.25 -1.02% ... we've had retracement from $49.23 to $17.96 for I can't remember how long. Note how 19.1% retracemet of $23.93 has served as resistance for multiple sessions. This hints that market makers still have sell side bias in the stock. Lots of damage was done to PSFT and I would have thought some bulls in this subsector of software would have bought stock by now. Hasn't happened so far and has me thinking further concern toward stock and perhaps group.

SAP $33.35 ... we've had retracement at $49.10 to $22.58. This has 50% still serving as resitance at $35.84 and 38.2% serving as support at $32.71 (along with 200-day MA). This level $32.71 needs to see a break lower to have KRON bear looking for it to also follow lower.

KRON we talked about yesterday in 03:00 Update. Note that stock is sitting right in the middle of retracements and rather "neutral" to market maker support resistance levels. Link This has me thinking only trader that really has "best feel" for the stock is the market maker taking the orders and measuring order flow. I'm a trader playing the downwarnd trend and thinking market maker is seller at/near the $42.87 level, especially if he/she was long inventory from past support at that level.

  Jeff Bailey   4/25/02,  11:42:17 AM
Jeff, There is about .40 spread in KRON, what does in mean, respect to short a Kron.

Wider spreads usually indicative of "lack of interest" or higher perceived risk my the market makers. Thus a spread is "built in" to allow market makers some "chop" as they buy at the bid, sell at the offer and keep the spread. This is then how they get paid for the RISK they take on for making a market in the stock.

RISK is not only for bullish side of their inventory, but also bearish side of inventory.

  Jeff Bailey   4/25/02,  11:39:06 AM
PacifiCare (PHSY) $27.90 +9.97% .... wonder how things are going at "Fulcrum" today? Stock breaking to new highs. Link

  Jeff Bailey   4/25/02,  11:31:11 AM
Jeff: Try attaching retracement to low at 5.51 and high at 23.8 Gives a great fit at 38% and 62% levels. Bullish vertical count on p&f is 24 Neat huh? :-) Link

Fantastic! Gives 38.2% of $12.56 (support on 04/11) think of market makers buying inventory. Then resistance at 50% of $14.74 recently, think of market makers selling some inventory, then yesterday's break above $14.74 and BIG volume now has resistance at 61.8% of $16.92 (market maker can't be pressuring offer too much here unless he/she was BIG long in inventory from $12.56-$14.74). Expect firm support at 50% retracement and close above $16.92 could push to upper end of regression at/near $18.50 and even the 80.9% retracement of $20.45.

Would be "nice" to see a market flush lower in next week or so, get AMZN to pullback to/near $15 for a nice lower risk entry point. However, watch for a break of $17. Would think there's some shorts at current levels (wrong thing to be doing) that would be eager buyer on pullback to $15.

  Leigh Stevens   4/25/02,  11:22:13 AM
SECTOR UPDATE: Oil Service sector ($OSX.X), last at 106.6, which had been bumping into resistance in 105 area, has busted out to upside. Doing the best today in this group is: Global Industries (GLBL) +4.3%, Varco Intl.Inc.(VRC)+3.6%,Smith Intl.(SII) +3.5% and mirroring break out to new high in OSX; BJ Services (BJS) +3.3%; Tidewater (TDW) +3.1%. ALL these have been up 3 or more percent today and mostly look like they have some more room on the upside.

  Jeff Bailey   4/25/02,  10:42:38 AM
Stocks find bid , but current action looks to be that of some MASSIVE short-term short-covering. Watch that 10-year YIELD to see if buying in stocks is simply short-covering or move by the bulls from technicals.

10-year YIELD broke below regression channel, found support (sellers in the bond) at 5.033%, which is/was very close to the 5.00% YIELD level I had been looking for some selling a couple of weeks ago.

HMO Index (HMO.X) 606 +5% leads sector gainers.

  Leigh Stevens   4/25/02,  10:38:10 AM
Jeff has been busy, busy this morning and has kept us up to date very well. I was dealing with an international bank transfer, while Spain was still open for business -- they keep what we used to call "banker hours", closing at 3 pm. In time for siesta. Not a bad idea. If we took timeout from 1-3pm, everyday for nap time in the NYSE and Nasdaq, it might help keep the bears more friendly.

They (the bears) definitely smell blood this am. Typically, (because the market never does exactly as we expect) on these breaks under key psychological support areas when oversold, there will be an initial bounce back which we are getting now.

This rebound has flipped momentum osciallators up. This is short covering! I would not believe any rebound from here and its likely to be a relatively short repreive. Key resistance now is 1100 in SPX (previous support), 546 in OEX, DJX at 100.7, COMP at 1724-1725; NDX at 1325; and QQQ at 32.80-33.00.

  Jeff Bailey   4/25/02,  10:36:03 AM
Barrick Gold (ABX) $19.71 +2.65% ... stock breaking to new 52-weeker after Prudential upgrades to "buy" from "hold" based on belief that the company appears to be making more progress developing new gold mines and finding new gold reserves than any other large gold producer. Thinks ABX is positioning itself to be the largest and most profitable surviving entity after the long 1997-2002 gold price downturn. Price target is $25. Link

  Jeff Bailey   4/25/02,  10:31:40 AM
Existing Home Sales fell 8.3% to 5.4 million unit rate in March. This is slightly weaker than the 5.55 million consensus. Though down from big numbers posted in Jan/Feb, still a strong pace of sales and higher than levels seen in Q4 of last year. Not expecting much market impact from today's number.

  Jeff Bailey   4/25/02,  10:28:25 AM
Dow Industrials (INDU) 9,972 -0.58% ... battling back after trading the 200-day MA. Very early observation, but looks like some bulls were sitting there along with some bears buying a level of technical significance/target. Link

Rally potential to 10,250 (just under 50-day MA) is assessed risk a bear must be willing to take.

  Leigh Stevens   4/25/02,  10:25:33 AM
Index Update: As could be anticipated from the weakness yesterday, DOW 10K and SPX 1100 were not going to hold as fear & loathing is setting in seriously in the market. This is what will ratchet up bearish sentiment quite a bit. Significant bottoms never seem to occur without a significant degree of pessimism re the market outlook, so that's the good news. The bad news is that there is very few places to hide. Contrary to the media talking heads, ALL the money in the market CANNOT go into small cap, mid cap, health care, and the few other stray sectors that are still going up. In fact, the S&P 600 small cap iShares and Russell 2000 iShares are looking toppy per my look at the charts last night in Index Trader at Link It'll be interesting to see how much money these areas can absorb without getting very overvalued.

  Jeff Bailey   4/25/02,  10:21:31 AM
SBC Communicatons (SBC) $31.96 +1.20% ... put trader with May expiration from $34 level and prior comments should note strength this morning or bucking of Dow Ind. Action. Stock has been firming just above retracement of $30.51. Not willing to risk gains, snug a stop gain just above $32.50 and be willing to roll out to longer-term expiration on rally near $34.

  Jeff Bailey   4/25/02,  10:13:09 AM
InVision (INVN) $23.55 -13% ... Link stock hit lower on accounting concerns. Merrill downgrades to "neutral" from "buy" after the TSA announced they would only buy 1100 EDS machines. Merrill lowered 2003 est to $2.25 from $3.25 and 2004 to $2.40 from $2.60; believes stock could trade in the mid-upper $20's pending better visibility into 2003-04 demand.

Others also under pressure for "accounting concerns" are CYTC, FFIV.

  Jeff Bailey   4/25/02,  10:05:58 AM
AOL "value" I can see part of the "argument" for value in AOL, but what gets me is that yesterday's earnings showed some type of "write down" of $54 billion is some type of past "value." I think these types of thoughts have other bulls cautious.

  Jeff Bailey   4/25/02,  10:03:32 AM
Hmmm... Cardinal Health (CAH) $69.70 +0.46% ... bulls like this stock finding bids. Excellent test under current market conditions. Stock holding in there and has me observing and feeling comfortable with past observations of longer-term institutions accumulating shares.

  Jeff Bailey   4/25/02,  10:02:13 AM
HMO Index (HMO.X) 596 +3.23% ... amazing.

  Jeff Bailey   4/25/02,  9:58:48 AM
Overture (OVER) $23.45 -8.2% .... early alert set just above the $23 level. Looking bearish. Vertical count of $16. Link

May need to weight the thoughts of news of potential deal with AOL, stock is a wild one and not for the weak at heart.

I have a fitted retracement from $40.94 to $12.43, which has the 50% at $26.69, 61.8% at $23.32 (has served as major support last couple of weeks) and 80.9% of $17.88 (honors 02/06/02 low).

  Jeff Bailey   4/25/02,  9:56:12 AM
Dow Industrials (INDU) 9,935 ... key technicals here have the Dow Industrials testing its 200-day MA. Link

  Jeff Bailey   4/25/02,  9:39:46 AM
April Gold Futures (gc02j) $309 +1.54 challenging the 02/08/02 contract high of $309.40. Break higher might be correlated with some action points defined in some stocks you may be trading. Upside to this contract comes from "fitted" retracement we did that has 19.1% at $306.09 and 0% resulting up at $316.20.

  Jeff Bailey   4/25/02,  9:38:02 AM
Gold Silver Index (XAU.X) $75.39 +1.78 ... sector gainer and gapping to a higher open and new 52-week high. Action hints that MARKET getting jittery and shorts most likely paying the price.

  Jeff Bailey   4/25/02,  9:32:36 AM
OSI Systems (OSIS) $18.50 -11% ... technicals looking like big shorts are on this one. This morning's trade at $20 is quite negative. Would be looking to put the $20's for June or later expiration. Link

  Jeff Bailey   4/25/02,  9:30:45 AM
Dow Industrials (INDU) With futures at 9,975, this is a rather quick break below psychological support of 10,000 and this will weigh on a bulls psychology. It's also going to add an "O" to the p/f chart of the Dow Industrials chart, which gave a triple-bottom sell signal yesterday at 10,050 that came BELOW trend. Link

  Jeff Bailey   4/25/02,  9:28:09 AM
Semiconductor Equipment Yesterday's action had some of our closely watched names like AMAT, KLAC, NVLS showing weakness and either breaking some 50-day MA's and upward trends or sitting right on them. When I trade bullish in a name and uncertainty "grabs" me, I error on the side of caution. Better to keep a loss small than agonize over it.

Look to write some in/at the money covered calls for some stocks you may not mind holding for a couple of months.

Again, any shorting in the group is going to be done (I think) by bears that are looking for a sympathy move lower with other semiconductor makers.

I think many of the equipments stocks may be vulnerable to their 200-day MA's and currently that would be an ULTIMATE target for bears. Bears in the equipment group should not expect any "easy" trades and need to be willing to take profits on targets and be very patient with their trades. Lots of bears still look short from lower levels and looking to get back to break-even.

  Jeff Bailey   4/25/02,  9:22:41 AM
More defensive Most equity bulls should be erroring on the side of caution. Internal weakness has come back to the NASDAQ-100 Bullish % despite the lower levels and internal weakening continues in the S&P 500 bullish %. Several alarming levels of support were broken yesterday.

"Defensive" to me means tighter stops under trades or the hedging of long positions with protective puts or the writing of covered calls.

Sectors that could remain bullish, but need monitoring are .... Homebuilders (lower YIELDS from the 10-year and 30-year) could create lower mortgage rates and keep builders strong on the thought of lower mortgage rates keeping business steady. Bears will argue that consumer confidence will fall off and home sales will go in the tank.

I won't argue with that thought, but simply look at the charts and see if that scenario put any money in a bears pocket in the last 2-years and go from there.

Look for good entry points in healthcare stocks. Sector less influenced by "economic concerns" and cash has been rotating there since the beginning of the year.

  Jeff Bailey   4/25/02,  9:15:17 AM
Good morning! Stock futures are lower this morning and current levels of S&P futures (sp02m) -4.30 at 1,087.50 are below fair value so traders are looking for a lower open.


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